I help multimillionaires manage their money, and here are the 10 best pieces of financial advice I can give you

Jeff Ladouceur,

Contributor

Jan. 11, 2016, 12:20 PM

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I have spent the last 16 years advising some of the most amazing, successful, and yes, wealthy families in the US.

These enterprising families have worked most of their lives to be the best at what they do and bring the same talent to managing their wealth. Wealth does not build itself, but it can be built, nurtured, and preserved.

Based on that understanding and my experience, here is my list of the top 10 strategies for building and growing wealth.

Think like an entrepreneur

The enterprising family exhibits entrepreneurial creativity in many aspects of their life. They often break from tradition, accept new approaches, and take measured risks.

Entrepreneurs know that rules are constantly changing — and the same is true when it comes to building wealth. To do well, be a self-learner, hire the right expertise, and acquire creative, goal-oriented financial advice. Be a financial entrepreneur.

Ask smart questions and insist on answers

Don't be afraid to ask yourself and your advisers the tough questions.

Ask yourself: Do I have enough to support my lifestyle? Do I know what will happen to my family if something happens to me? Is my wealth having the impact that I desire? Am I missing anything?

Ask your adviser: Can you get me answers to my questions (see above)? How do you get paid?

When these questions are answered, you will be better informed and gain greater confidence in yourself, your adviser, and your approach.

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Define success, then achieve it

Take time for you (and your spouse) to clearly define, set, prioritize, and agree upon and document specific goals that you want to achieve, such as a specific lifestyle or charitable grant.

This may sound trite or even cliché, but our clients who set goals move to action quicker, make better decisions, and get better results relative to their peers. Taking a goals-based approach defines benchmarks that are relevant and meaningful for you and your family.

If being financially successful is important, then this will be time well spent.

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Track cash

In my experience, individuals often underestimate their spending on average by 25% and sometimes as much as 50%.

Further, they save less than they think they do or less than they should to meet future goals.

Most alarming, their cash reserves are dangerously low and therefore, they may be ill prepared for an emergency or call on capital.

It is critical to prioritize liquidity and automate bill payment and savings. Additionally, adopt cash flow reporting to get the insight you need to adjust your plan and make better cash choices.

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Invest with purpose

Enterprising families go beyond a traditional single portfolio filled with a mix of index funds.

They segregate assets by goal or purpose and invest not just to beat an arbitrary benchmark but to meet a specific outcome, such as supplementing income by $100,000 or accumulating $2 million to fund a new business venture.

Portfolios with different outcomes should be customized to each goal — no more one-size-fits-all portfolios for you.

Measure success

Glancing at a statement and then filing it away does little to put you in control of your wealth. And why would it? What you really need is a clearly organized view of all your assets, with the additional context of how you are doing relative to achieving your goals.

When you track progress to goals, you can identify challenges, make changes, and see success quicker. If you measure it — you will get it done.

Talk about money

Successful families talk about money — a lot. They set expectations for their children to be financially successful. They proactively communicate lessons learned, mistakes, and best practices with their children.

They don't preach, but instead take everyday opportunities to pass on knowledge that have taken them, in some cases, a lifetime to accumulate. The result is that financial success is transferred across multiple generations.

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Democratize decision-making

The days of the traditional patriarch making all the financial decisions should be long gone. Successful families are adopting a more democratic approach to managing family assets — including immediate family and sometimes even extended family members in decision-making.

While this is a relatively new development, families that have adopted this collaborative approach make more balanced, thoughtful, and unbiased investment decisions.

Take a boardroom approach

In addition to bringing in more family members, enterprising families are surrounding themselves with talented wealth management professionals.

These individuals are invited in to offer valued counsel and challenge decisions as well as introduce processes and technology that support more collaborative decision making. This "board member" thinks strategically and gets things done. Product pushers need not apply.

Enterprising families recognize that sustaining positive financial outcomes requires structure and consistency. Resolve yourself to adopt some or all of these strategies and your 2016 will be financially brighter.